Starting January 1, 2024, a new regulation under the Corporate Transparency Act (CTA) impacts private medical practices and other small businesses across the U.S. The rule requires these businesses to disclose specific Beneficial Ownership Information (BOI) to the Financial Crimes Enforcement Network (FinCEN). In this post, we’ll break down what this means for private practice owners, what you need to report, why it’s being required, and the key steps you can take to stay compliant.
Why BOI Reporting?
The BOI reporting requirement was introduced as part of the Anti-Money Laundering Act of 2020. This act aims to increase transparency around company ownership, making it harder for individuals to hide illegal activities behind layers of complex corporate structures.
Purpose of BOI Reporting
The BOI requirement exists to create transparency and combat financial crimes by:
- Preventing Financial Crime: Increased transparency deters money laundering, fraud, and tax evasion.
- Reducing Misuse of Corporate Shells: Anonymous shell companies are sometimes used to mask illegal activities. This new level of disclosure makes it harder to use complex ownership to hide wrongdoing.
- Aligning with Global Standards: BOI reporting is part of the U.S.’s commitment to anti-money laundering standards on an international scale. This harmonization of rules puts the U.S. on par with other countries prioritizing financial transparency.
What is Beneficial Ownership?
Under the CTA, a beneficial owner is anyone who:
- Owns or controls at least 25% of the company, or
- Exercises substantial control over the company.
In private medical practices, beneficial owners will likely include the primary physicians, owners, or shareholders with a significant interest or decision-making power. Even if a practice is organized as a professional corporation (PC) or a limited liability company (LLC), this reporting requirement still likely applies.
Information You’ll Need to Report
FinCEN requires you to report some basic information for each beneficial owner- as we will go through later in the post, in a stepwise manner.
You don’t need to report financial data, specific medical credentials, or operational information—this is purely about who owns or controls the business. For practices with a small group of doctors, the main owners or partners will likely be the only ones qualifying as beneficial owners.
Who Manages BOI Reporting?
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) oversees BOI reporting. If you have any overseas financial interests- like bank accounts or other investments- you may already be familiar with FinCEN: it’s the same people you report FBAR (Foreign Bank Account Reporting) to.
Deadlines and Requirements
Here’s how reporting timelines break down:
- Existing Companies (formed before January 1, 2024): These entities have until January 1, 2025, to file their beneficial ownership information.
- New Companies (formed on or after January 1, 2024): These must file within 30 days of formation or registration.
- Ownership Changes: If there’s a change in beneficial ownership (like a new partner buying into the practice), the practice must update its filing within 30 days.
Exemptions – But Not Likely for Most Practices
Certain large or heavily regulated entities—like publicly traded companies, banks, or insurance providers—are exempt. However, most private medical practices won’t qualify for an exemption because they’re too small and lack the federal or state-level reporting obligations that would exclude them.
How Does This Impact Your Practice?
For private practices, staying compliant with BOI reporting is essential. Non-compliance can result in civil penalties up to $500 per day and criminal penalties that include up to $10,000 in fines and potential imprisonment. No one wants that hanging over their practice.
Tips for Staying Compliant
- Complete the initial BOIR before the deadline of January 1, 2025
- Update the BOIR any time there is a change in beneficial ownership, like a new partner coming on board, who would have at least 25% ownership
How to File Beneficial Ownership Interest Report
- Head over to Financial Crimes Enforcement Network (FinCEN)’s website here.
2. Select how you would like to file. Your options include filing online (easiest), offline (File pdf) or System-to system API (when a third party is doing it on your behalf).
3. It gives you a scary-looking warning notifying you that you are on a government website and you better be on your best behavior.
4. Once you accept the warning, you start the BOI reporting. For most of us, this will be the initial report.
5. You will choose item 3: request FinCEN ID: because you do not have a FinCEN ID yet, before you complete your initial BOIR. Once you submit the BOIR, your company will receive a FinCEN ID.
6. You state the legal name of your business.
7. And an Identification, usually the EIN.
8. Also where the business was registered and its address.
9. If your practice was started before 2024, you will check “Existing reporting company”. Then you do not get to fill out Part II (Company Applicant) and it will take you straight to Part III.
10. Part III lists the Beneficial Owners, one at a time, and fills in demographic details of each Beneficial Owner. You likely do not have a FinCEN ID- so you skip 36.
11. Most practices are also not exempt entities (like publicly traded companies), so you skip 37 as well.
12. Then you fill out your demographic information, assuming you are a beneficial owner: name, date of birth, residential address and one form of identification. You also have to upload a picture of your ID.
13. If you have more than one Beneficial Owner, you would go back to the top of the page and “Add Beneficial Owner” and fill out the same details for each owner. Once you are done with adding each owner, it brings you to the submission page.
14. And you’re done! Download the BOIR and keep it somewhere safe. This is not something you have to do annually. You have to submit an updated report only if there’s a change to ownership.
It took me less than 10 minutes to complete. It’s super easy. Safe some money and do it yourself.
As with all posts, this one comes with the disclaimer that I am not a qualified legal, accounting or any other kind of professional. My only degree is an MD. So, please consider everything here just informational (and maybe entertaining) and run everything by a real professional.
